Supreme Court may limit protections for whistle-blowers
Verdict would be a major victory for conservatives
WASHINGTON – Whistle-blowers did not have a good day at the Supreme Court on Tuesday.
The conservative-leaning court appeared likely to limit the whistle-blower protections in the 2010 federal law cracking down on Wall Street fraud and abuse because of the specific way it was written by Congress.
The verdict would be a major victory for conservatives, who say judges should interpret laws literally and agencies should not be granted discretion to implement them differently.
It would be a loss for proponents of the Dodd-Frank law, passed in the wake of the financial crisis a decade ago, as well as the Sarbanes-Oxley law of 2002, enacted after the Enron securities-reporting scandal.
Both of those laws were intended to protect employees who blow the whistle on alleged wrongdoing. But the DoddFrank law defined whistle-blowers narrowly by specifying that they must notify the Securities and Exchange Commission, not just company officials.
“I’m just stuck on the plain language here,” said Justice Neil Gorsuch, a stickler for reading the Constitution and laws literally rather than contextually, during oral argument. “How much clearer could Congress have been?”
Gorsuch said two federal circuit courts should not have upheld the SEC’s action following enactment of the Dodd-Frank law, when the agency said internal whistle-blowing would be covered as well. He said that allowed the SEC “to swallow a large amount of legislative power, and judicial power in the process.”
The court’s more liberal justices ap- peared stumped by the language of the law and resigned to having the whistle-blower protections narrowed.
“It’s odd. It’s peculiar. It’s probably not what Congress meant,” Justice Elena Kagan said. “But what makes it the kind of thing where we can just say we’re going to ignore it?”
The case dates to 2014, when Digital Realty Trust fired its vice president of portfolio management, Paul Somers, following his internal complaints about a supervisor’s actions. Somers filed suit and won at both the federal district and appeals courts, which ruled that Congress’ intention was to protect such whistle-blowing.
Kannon Shanmugam, the lawyer representing the company, said the SEC’s interpretation of the law was “procedurally defective” and would result in “wild overbreadth” by allowing too many whistle-blower complaints.
Daniel Geyser, Somers’ attorney, said a reversal of the lower court rulings would penalize his client for keeping his complaint within the company rather than going first to government regulators.
“What he tried to do was do the right thing and to honor the corporate code of conduct,” Geyser said.